Insurance Company’s Duty to Indemnify District for Sexual Abuse Lawsuit
Case: Freeburg CCSD No. 70 v. Country Mutual Ins. Co., RSUI Indemnity Co., and John Doe 4, 2021 IL App (5th) 190098 (5th Dist. 2021).
Decision Date: Thursday, April 8, 2021
The Illinois Appellate Court for the 5th District (Court) considered an appeal from the Circuit Court of St. Clair County (Circuit Court), and held that a sexual abuse complaint brought against Freeburg CCSD No. 70 (Freeburg) in 2014 was not subject to coverage under a claims-made insurance policy effective beginning in 2013 because the complaint involved the same, continuing course of misconduct by the same school official as complaints dating back to 2010.
This case involved a coverage dispute pertaining to a claims-made insurance policy (policy) issued by RSUI Indemnity Company (RSUI) to Freeburg from July 1, 2013 through July 1, 2014. RSUI denied Freeburg’s demand for coverage under the policy for an underlying federal lawsuit (Doe 4 action) filed against Freeburg and certain former Freeburg officials. The Doe 4 action was brought by a former Freeburg student who alleged he had been sexually abused and harassed on multiple occasions by a male Freeburg official, Robin Hawkins, from 2007-2009. Hawkins had been employed by Freeburg from 1977 to 2009, up to the point when he committed suicide. Prior to Doe 4, there were three other Doe actions filed against Freeburg alleging Hawkins committed sexual abuse in 1991, from 1994-1996, and from 2005-2008.
When the Doe 4 action was filed in 2014, Freeburg demanded RSUI cover it under the policy. RSUI denied coverage, alleging that because Freeburg had been aware of multiple reports and allegations of sexual abuse dating back to 1980, the Doe 4 complaint was part of a “single claim” (starting with Doe 1) made against Freeburg prior to the inception of the policy and therefore it was exempt from coverage. RSUI’s “single claim” provision stated:
“All Claims based on, arising out of, directly or indirectly resulting from, in consequence of, or in any way involving the same or related facts, circumstances, situations, transaction or events, or the same or related series of facts, circumstances, situations, transactions or events shall be deemed to be a single Claim for all purposes under this policy and shall be deemed first made when the earliest of such Claims is first made, regardless of whether such date is before or during the Policy Period.”
In September 2014, Freeburg brought this lawsuit seeking a declaration that RSUI had a duty under the policy to defend and indemnify Freeburg in the Doe 4 action. Freeburg asserted that the Doe 4 action didn’t arise out of the same or related facts or circumstances as the previously filed Doe actions because each Doe action involved different minor male students at different time periods, and so it was not part of “single claim” and should be covered by RSUI. Following many motions and cross motions for dismissal and summary judgment, the Circuit Court determined that RSUI’s related-claim provision was ambiguous and that RSUI had a duty to defend and indemnify Freeburg in the Doe 4 action in the amount of $1,159,144.37.
RSUI appealed, alleging that the Circuit Court erred in finding the policy’s related-claim provision was ambiguous and that the Doe 4 action was a claim first made against Freeburg during the coverage period.
RSUI conceded that its policy language was broad but it asserted that the Doe 4 action was logically connected to the previous Doe actions, rendering all Doe actions a single claim first made against Freeburg before the RSUI policy was effective. The Court agreed with RSUI that its policy provision was not ambiguous, and also found that a plain, ordinary reading of the provision would lead a reasonable person to conclude that the Doe 4 action falls under it. The Court stated that “Claims that involve the same, continuing course of misconduct by the same school officials that culminates in the same type of harm from a common, identified sexual predator, while that predator was an employee of the Freeburg school district is a ‘related series of facts, circumstances, situations, transactions or events’ under any ordinary meaning of the phrase. This is especially true in the context of a claims-made policy, where the triggering event is the filing and service of a complaint, rather than the occurrence date of the alleged misconduct.”
Based on this, the Court reversed the Circuit Court’s judgment, vacated its orders, and remanded the order back to the Circuit Court with directions to dismiss two of Freeburg’s claims against RSUI.